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Romina Boccia

Germany’s constitutional debt brake, or Schuldenbremse, is a critical fiscal policy tool designed to limit structural government deficits. Instituted in 2009 following the global financial crisis, the debt brake has returned German public debt to sustainable levels while providing a fiscal anchor for the country’s economy. In contrast, the United States lacks such a fiscal brake, and the consequences of unrestrained spending are stark.

This week I’ll be on a panel at the Prometheus Institute Open Summit in Berlin, debating the German debt brake, fiscal policy, and MMT (officially, modern monetary theory, but referring to this pseudoscience as a magic money tale is more apt). I’ll be sharing insights from the US experience relevant to the German context. As Germany debates changes to its fiscal rules following a temporary loosening during the pandemic, there are critical lessons to be drawn from the US experience with unchecked deficit spending.

The German Debt Brake: A Resounding Success

The debt brake has helped place Germany on a more sustainable fiscal footing. Under Angela Merkel, the long-serving Christian Democrat chancellor who was often endearingly referred to as “Mutti” (Mother), the country consistently ran balanced budgets for six years in a row—commonly referred to as the schwarze Null (black zero). By 2019, Germany’s debt-to-GDP ratio had dropped to a manageable 60 percent, a significant improvement from the heights reached during the global financial crisis. This achievement wasn’t just a fiscal success; it marked the culmination of 10 consecutive years of strong economic growth and the highest levels of employment since German reunification.

The US Debt Crisis: A Cautionary Tale

Meanwhile, the United States faces a ballooning debt crisis, with public debt just shy of 100 percent of GDP at $28 trillion ($35 trillion if you add in debts owed primarily to Medicare and Social Security) and projected to rise sharply in the decades ahead. Despite this brewing fiscal crisis, US policymakers consistently fail to address the structural drivers of debt, rising health care spending and old-age benefits like Social Security, as temporary funding battles over annual defense and nondefense appropriations distract legislators from bigger challenges. This lack of fiscal restraint has left the economy vulnerable to higher interest rates, with interest costs now the biggest driver of growth in the budget deficit. The results are reduced investment and slower economic growth, as government deficit spending crowds out private initiatives.

Running Up Against Fiscal Limits with No Debt Brake

The United States illustrates the peril of allowing short-term political priorities to undermine long-term fiscal sustainability. Without a debt brake or similar fiscal rule, US politicians have repeatedly deferred hard choices about tax and spending policy. Now mounting debt-servicing costs crowd out spending on other priorities, with the Congressional Budget Office (CBO) projecting net interest to rise significantly absent corrective actions.

This year, interest on the US debt is set to surpass defense spending of $849 billion. Under highly optimistic assumptions that don’t account for expected congressional adjustments to tax and spending policies, the CBO projects that US debt will reach 122 percent of GDP by 2034. Looking out further, the CBO highlighted that rising debt could reduce per-person income by $14,500 by 2054, assuming the debt grows to nearly three times the size of the economy. Excessive government debt hampers economic growth by crowding out more productive investments that enhance living standards, saddling future generations with higher costs while reducing their economic opportunities. Additionally, rising debt reduces economic flexibility, which limits the government’s ability to respond to future crises.

Germany has its own set of economic problems, including high energy costs, excessive red tape, and expensive public pensions given rising old-age dependency. Yet even after betting on Russian oil and gas imports backfired, rapid population aging drove up public pension costs, and an excessive bureaucracy hampering investment and job creation, Germany is a fiscally responsible front-runner compared to the United States. This is largely due to its debt brake, which caps structural deficits and helps stabilize debt levels over the long term.

Do Not Abandon Fiscal Discipline in the Name of Investment

Germany faces growing pressure to relax or even abandon its debt brake after policymakers got a taste of what looser purse strings can buy when the pandemic allowed for greater debt accumulation. Proponents of higher deficits claim that the energy transition, greater defense needs, and rising social welfare demands necessitate more government borrowing. As is usually the case, such spending is being labeled as “critical investments.” The US experience demonstrates the dangers of abandoning fiscal discipline in the name of public investments with uncapped energy tax credits passed into law as part of the misnamed Inflation Reduction Act. These credits turned out to be far more expensive than what members of Congress thought they had enacted based on projections by official government watchdogs. And thanks to no real fiscal limits, higher costs are simply piled on top of rising debt.

Moreover, central government investment in infrastructure is often inefficient and counterproductive. Political considerations can shift funding to areas where it serves electoral ends rather than meeting market demand. Also, government projects rarely have the proper incentives to keep things on budget and on time. Infrastructure assets are often better managed by the private sector and state and local governments. Instead of subsidizing and intervening, governments should focus on regulatory reforms to reduce costs and encourage private investment.

Learning from US Mistakes

Germany’s debt brake is a testament to the power of fiscal discipline. Its constitutional framework provides a built-in restraint on government spending, forcing policymakers to prioritize and live within the country’s means. The United States, which lacks such a mechanism, practices unrestrained spending, which leads to spiraling debt, with no clear path toward fiscal sustainability. As Germany considers loosening its fiscal rules for good following several years of profligacy to combat pandemic-related economic weakness, it should heed the lessons from across the Atlantic—once fiscal discipline is lost, it’s hard to regain.

Instead of following the United States down the path of unchecked deficit spending, Germany should return to the debt brake, remembering its track record of success, and focus on easing red tape, reducing onerous taxes, and integrating immigrants faster into labor markets to spur investment and become an economic powerhouse once again.

Meanwhile, the United States should adopt clear fiscal rules to rein in unchecked deficits and secure economic opportunity for this and future generations. Effective fiscal rules can help control government spending, reduce public debt, and create a more stable economic environment that enables businesses and workers to thrive. By committing to fiscal responsibility, US legislators can boost confidence in the US financial system and ensure younger generations aren’t weighed down by excessive debt and the specter of higher taxes and inflation.

As the late Nobel laureate and economist James Buchanan and George Mason University economist Richard Wagner wrote in Democracy in Deficit, “Budgets cannot be left adrift in the sea of democratic politics.”

Norbert Michel

On September 18, the Fed announced a 0.50 percent cut in its target rate, the first time it has cut its policy rate since 2020. The size of the cut may have surprised some people, but the Fed has been as murky as ever about what it would do today, and that’s not surprising.

With inflation continuing to head in the right direction, some had argued that we would see a larger cut after US employment data was revised downward in August. But last week the CME Group’s FedWatch suggested most financial market participants did expect the 0.50 percent cut.

While the public was left to guess what the Fed would do, it is a fact that multiple rates have already been declining for months. For example, the 30-year mortgage rate has essentially been declining since October, as have the 3‑month and 1‑month Treasury rates. (The 3‑month Treasury took a sharper dive in June, and the 1‑month Treasury fell more sharply in August.)

So, maybe the Fed’s not as powerful as everyone seems to think. Regardless, the public should not have to guess what the Fed will do with its target at each meeting.

As my colleague Jai Kedia has noted, at least one standard policy rule suggests the Fed should have already cut its target. Specifically, in July it showed that the Fed’s target range of 5.25 percent to 5.50 percent should have been significantly lower, in the range of 4.50 percent to 4.75 percent.

Perhaps none of these rates are the “right” one. But the precise value of the Fed’s target is not what matters most. What matters most is that people want and need predictability and accountability for the Fed, and they have neither. Congress could, however, fix this problem by requiring the Fed to follow a policy rule.

At the very least, Congress could require the Fed to follow a rule and give it the ability to deviate from that rule, provided they explain exactly why (and what they’re doing) to Congress. This approach was in the 2015 FORM Act, a bill that passed the US House.

This sort of reform would greatly reduce uncertainty with respect to the Fed’s future policy actions without overly restricting the Fed. It would also make it much easier to hold the Fed and elected officials accountable for their decisions. That’s not too much to ask in a democratic country.

Jeffrey A. Singer

Brian Mann of NPR News reports today on encouraging new data released by the National Center for Health Statistics showing that overdose deaths from all drugs have dropped from a high of nearly 112,000 just over a year ago to 97,309 by April 2024, a drop of more than 10 percent. Overdose deaths from all classes of drugs dropped during that period. Fentanyl-related overdose deaths dropped from nearly 78,000 to 65,878, and overdoes deaths involving diverted prescription pain pills remained very low, falling to just over 9,000 (compared to 12,269 in January 2016).

This is good news. But it’s too early to celebrate. Ninety-seven thousand is a considerable number, and we have seen the overdose death rate pause (in 2018) before resuming its climb. However, many factors may contribute if this is the beginning of a new downward trend.

The overdose antidote naloxone, which the Food and Drug Administration allowed people to obtain over-the-counter in its nasal spray form last year, has become more widely available. All but a few states have now amended their drug paraphernalia laws to allow people to distribute and use fentanyl test strips to check drugs obtained on the black market for the presence of this potent synthetic opioid. Harm reduction organizations are handing out naloxone and fentanyl test strips to people who use drugs, often as part of syringe services programs. Local public health agencies have implemented campaigns to educate non-medical users about the availability of these harm-reduction tools and how to use them. As more non-medical users—and people who know and care about them— avail themselves of these tools, they reduce the risk of fatal overdose.

Congress made it easier for clinicians to treat people with buprenorphine for opioid use disorder starting in 2023. While early evidence shows clinicians have not been quick to take advantage of the liberalized regulations, any increase in the number of people with opioid use disorder who are receiving buprenorphine treatment should help reduce the risk of fatal overdose from street drugs.

Then there’s the impact of the COVID-19 pandemic. Isolation, anxiety, and despair during the pandemic caused an increase in adult substance use during the pandemic, including alcohol consumption. Pandemic-related lockdowns made it more difficult for people to access harm reduction or drug treatment programs. The border closures and supply chain disruptions during the pandemic drove drug trafficking organizations to switch from heroin to fentanyl, which was easier to produce and distribute under those circumstances. All of these factors contributed to a surge in overdose deaths during the pandemic years. Some of the decrease in overdose deaths might reflect an ebbing of that surge as the public health emergency ended and life became more normal.

Another phenomenon that might be contributing is the dramatic increase in marijuana consumption as more states have legalized it for recreational use. To date, 24 states and the District of Columbia have legalized recreational cannabis. Seventy-four percent of Americans live in a state where recreational weed is legal. The National Survey on Drug Use and Health reported last May that daily marijuana use is now more common than daily alcohol consumption. Marijuana might be becoming an increasingly popular (and safer) substitute for other recreational drugs, attendant to it becoming increasingly legal and socially acceptable.

Sadly, part of the decline in overdose fatalities might be because many non-medical users are dying, reducing their population.

It’s essential to keep in mind that overdose fatalities hover around 100,000 per year, even though government policies continually pressure clinicians to reduce opioid prescribing. Opioid prescribing rates dipped below 1992 levels two years ago. Policymakers have mistakenly attributed the overdose problem to clinicians treating their patients’ pain despite the lack of evidence of any correlation between prescription rates and non-medical use rates. Patients suffer in pain while overdose fatalities from illicit drugs remain astronomically high.

The overdose crisis has always been a prohibition crisis. If policymakers want to reduce overdose fatalities dramatically, they will make currently illicit drugs legal and regulated, as they have done with alcohol and tobacco—drugs that arguably do more harm to the body than many presently illegal drugs.

Jeffrey Miron

A standard assumption about elected officials is that they act in the best interests of their constituents. Perhaps that is true in some cases, but more generally they seem motivated by self-interest:

In response to the COVID-19 pandemic, the US government transferred nearly $1 trillion in aid to state and local governments—the largest influx of federal money in response to a public health or financial crisis in history. The goal was to stabilize the economy while providing states with the necessary resources to address the public health crisis.

However, our research finds that this aid had another effect: increasing the electoral chances of incumbent politicians. Nationwide, incumbents and their parties won 90 percent of gubernatorial and Senate elections during the pandemic, a substantial improvement from their 81 percent win rate in the years leading up to the pandemic.

This result does not, by itself, prove the pandemic payouts were a mistake. It does, however, suggest the amounts were excessive, and not well-aligned to their best uses.

This article appeared on Substack on September 18, 2024.

David J. Bier

The Medical Expenditures Panel Survey (MEPS) released its latest data from 2022 last month. The MEPS is a set of large-scale government surveys that are “the most complete source of data on the cost and use of health care and health insurance coverage.” The data show that immigrants accounted for 19 percent fewer Medicaid and Medicare expenditures per capita than the US-born population from 2002 to 2022.

The MEPS “collects data on the specific health services that Americans use, how frequently they use them, the cost of these services and how they are paid for, as well as data on the cost, scope, and breadth of health insurance held by and available to U.S. workers.” The MEPS supplements its findings with data directly from medical providers so it is not based solely on people’s recollections. A key feature of the survey is that it reports the actual dollar amounts spent by birthplace, which no other survey does.

Immigrant Medicare and Medicaid Costs

Figure 1 shows the total inflation-adjusted per capita Medicare and Medicaid expenditures for 2002 to 2022. The data exclude the years 2004 to 2006, when no birthplace variable was included, and 2013, when a survey weighting issue prevented using the birthplace variable. In 2022 dollars, foreign-born people (mainly immigrants, plus some children of Americans born abroad) received $1,775 per person, compared to $2,180 per person for US-born individuals. Immigrants accounted for 19 percent less government Medicare and Medicaid spending than US-born individuals.

Figure 2 shows that this pattern of lower spending has persisted for the last 20 years. For the available years, immigrants accounted for 11.5 percent of combined Medicare and Medicaid spending. Cumulatively, if the average immigrant had cost as much as the US-born population, the government would have had to spend about $300 billion more in those years. The full data are displayed in Table A at the end of this post.

The MEPS data has an interesting effect on estimates of the fiscal consequences of immigration. In its 2017 study, the National Academies of Sciences, Engineering, and Mathematics (NAS) used a two-step process to estimate Medicare and Medicaid spending costs, which Cato used in its 2023 report. First, the NAS used the Current Population Survey Annual Social and Economic Supplement to find the number of immigrants enrolled in those programs and then used the National Health Expenditure Accounts (NHEA) to identify per-capita costs per enrollee by age and gender. The NHEA does not distinguish between spending by birthplace or citizenship.

Table 1 compares the distribution of spending under the NAS methodology compared to the MEPS. It updates the NAS work through 2022. The NAS model assigns about the same amount of Medicare spending to immigrants as the MEPS (9.6 percent to 10.3 percent), but the real difference emerges for Medicaid. The NAS model assigns nearly 16.7 percent of spending to immigrants, compared to the MEPS, which finds just 13.6 percent—19 percent lower. Medicaid is a smaller program, but as it is means-tested, it disproportionately affects the estimates among low-wage immigrants.

Why Immigrants Use Less Medicare and Medicaid

Despite their lower incomes, immigrants are less likely to use publicly funded health care for several reasons. Most importantly, they are younger, but even controlling for age, immigrants tend to be healthier and participate in fewer high-risk activities. In addition, their eligibility for Medicare and Medicaid is more limited than for the US-born population. They need to be lawfully present and to have worked ten quarters in the United States to qualify for Medicare. And, in most cases, they need to have lived for at least five years as a lawful permanent resident to qualify for Medicaid, where the state government pays for it. Finally, some eligible immigrants also do not enroll in these programs out of ignorance or fear about its immigration effects.

The government should go further to restrict immigrant eligibility for Medicare and Medicaid. The best experimental evidence indicates that Medicaid does not improve health outcomes for participants, and unnecessarily shifts health care costs onto taxpayers. When Congress eliminated Medicaid eligibility for many immigrants in the 1990s, the share of immigrants without health insurance did not rise. Those same immigrants increased their work effort and took jobs that offered health insurance. Reducing the taxpayer costs of immigration would increase the already substantial fiscal benefits of immigration, making positive reforms more likely.

Immigrants positively affect the health care system in the United States. Although immigrants receive benefits, they also pay taxes and premiums to cover the costs of their expenditures. As doctors, nurses, health aides, and assistants, they also directly provide services that reduce the cost of health care in the United States. These workers improve health outcomes for Americans. If members of Congress truly care about improving Americans’ health care, they should make legal immigration substantially easier.

Notes: This post expands on findings by Drishti Pillai and Samantha Artiga of the Kaiser Family Foundation that reviewed the MEPS immigrant health care spending for 2021. I appreciate them sharing their methodology. Mike Howard used Cato’s updated NAS model to calculate immigrant Medicare and Medicaid costs

Emily Ekins

On this Constitution Day, 236 years after the US Constitution was ratified, Americans continue to express high regard for this monumental document. However, most worry about how it is currently being followed. A national survey of 2,000 Americans the Cato Institute conducted with YouGov found that 85% of Americans have a favorable opinion of the Constitution. However, 70% believe the American Founders would be disappointed with how our country is following the Constitution today.

An overwhelming majority of Americans, 94%, believe that the Constitution is at least somewhat important for protecting their liberty, including 56% who believe it is extremely important. When asked how important various constitutionally protected rights are, Americans had favorites. (The survey asked Americans about rights explicitly stated in the Constitution, explicitly recognized by the courts and their legitimacy not seriously disputed, or explicitly recognized by the courts but may remain controversial.)

The largest majorities of Americans said that equal protection under the law (77%) was “extremely important” to them, as is the right to privacy (76%), the right to vote (75%), and if accused of a crime to be made aware of the accusation and evidence (75%), and the right of free speech (74%).

Next, large majorities believe that the right to private property (71%), a fair trial (70%), a trial by a jury (70%), freedom of religion (68%), due process of law (68%), freedom against unreasonable search and seizure (68%), freedom of assembly (67%), right to travel (65%), freedom of the press (62%), the right to self defense (61%), to marry (61%), to petition the government (57%), freedom against cruel and unusual punishment (54%), and the right to bear arms (39%) are extremely important.

Women, the Young, Diverse, and Liberal Have More Skeptical Views of Constitution

Patriotic feeling and favorability of the Constitution varies considerably across demographic groups. In short, young Americans, women, racial minorities, lower-income Americans, liberals, and Democrats have more negative views of the Constitution than older Americans, men, white Americans, higher-income Americans, conservatives, and Republicans.

For instance, 75% of American seniors have “strongly” favorable views of the U.S. Constitution compared to half that (33%) among Americans under 30. Men are nearly 20 points more likely than women to agree (61% vs 44%). White Americans (61%) are also more likely than Hispanic Americans (39%), Black Americans (28%), or Asian Americans (24%) to feel very favorable toward the Constitution. Strong conservatives (83%) are also more than twice as likely as strong liberals (31%) to feel very favorably toward the Constitution. Similarly, Republicans (74%) are nearly twice as likely as Democrats (42%) to have strongly positive views of the Constitution.

Majority of Gen Z Supports Writing a New Constitution

America’s youngest cohort of adults has the most skeptical attitudes toward the Constitution. Gen Z is the least likely (39%) cohort to say they are grateful for the founding of America, compared to 77% of seniors, or feel that the Constitution is extremely important for protecting their liberty (38% vs 73%).

Thus, it’s perhaps less surprising that a majority (55%) of Americans under 30 would support writing a new American Constitution “to reflect our diversity as a people.” In contrast, 40% of 45–54 year olds and 25% of Americans over 65 agree. Nearly a third (32%) of Gen Z would also support designing a new American flag compared to 25% of 45–54 year olds, and 11% of those over 55 years old.

Not just Gen Z, but Americans under 45 are more likely to think of America’s Founding Fathers as villains and heroes more than heroes (49% say villains and heroes and 46% say heroes). In contrast, majorities of Americans aged 45–54 (53%), 55–64 (62%), and over 65 (65%) view the founders as heroes. 

Gen Z is the most likely cohort to believe the disputed claim that the American Revolutionary War was primarily fought to preserve slavery (20% believe this vs 10% believe this among those over age 65). Gen Z is also the least likely to know basic facts about the American founding. For instance, comparing Americans under 30 to those over 65, Gen Z is the most likely not to know that the Declaration of Independence led to the American Revolutionary War (33% vs 19%), or that there were 13 original colonies (33% vs 12%), or that George Washington famously crossed the Delaware River to eventually lead the Americans to victory in the war (44% vs 12%)

Despite different cohort’s attitudes toward the Constitution, 9 in 10 Americans from all age groups believe that the founding of the United States has been primarily a force for good in the world.

Discussion

As Benjamin Franklin exited the Constitutional Convention after the Constitution had been ratified he was asked what sort of government they had created. His answer was short: “A republic if you can keep it.”

The American founders understood how fragile liberty and republican governance are to maintain. They feared without constant vigilance the country would devolve into despotism and tyranny. Most Americans share these concerns: 57% agree that “eternal vigilance is the price of liberty,” a quote often misattributed to Thomas Jefferson. Even more say they are more worried that we could lose our liberty in this country if we’re not careful (74%) than say they believe our freedom is protected (26%).

On this Constitution Day we have an opportunity to reflect on how a document written over two centuries ago created our country and put us on a path so we could strive to enshrine and expand freedom for all Americans and pursue a more perfect union. 

Hunter Johnson contributed to this report.

Methodology:

The Cato Institute 2024 4th of July Survey was designed and conducted by the Cato Institute in collaboration with YouGov. Toplines found here (pdf). YouGov collected responses online June 26-July 1, 2024 from a national sample of 2,000 Americans 18 years of age and older. Restrictions are put in place to ensure that only the people selected and contacted by YouGov are allowed to participate. The margin of error for the survey is +/- 2.41 percentage points at the 95% level of confidence. Full results, toplines, crosstabs, and methodology are forthcoming.

Jeffrey A. Singer

Axios reported on September 16 that a growing number of people are turning to do-it-yourself versions of prescription drugs, often sharing advice in online chat communities and listservs. Among the more popular DIY drugs are GLP-1s, such as semaglutide and tirzepatide, which help people lose weight—and may even help people reduce alcohol, tobacco, and recreational drug consumption—by directly working on the brain to reduce craving and increase satiety.

The Axios reporter stated that the “knee-jerk reaction” of medical professionals is to deride the phenomenon. However, she interviewed Anne Wexler, an assistant professor of medical ethics and health policy at the University of Pennsylvania Perelman School of Medicine, who empathized with the do-it-yourselfers. Wexler empathizes with patients who grow desperate and “willing to do anything to alleviate suffering for themself or a loved one,” and told the reporter that DIY medicine tends to “pop up where we see access barriers to treatment.”

As Michael F. Cannon and I write in Drug Reformation: End Government’s Power to Require Prescriptions, the Food and Drug Administration has a monopoly on determining what drugs autonomous adults are allowed to buy over-the-counter and what drugs they cannot purchase without first receiving a permission slip (aka “prescription”) from a government-licensed gatekeeper (aka “licensed health care practitioner”). This infringes on adults’ fundamental right to self-medicate. The FDA’s monopoly on the drug approval process also delays or blocks patients’ access to many drugs that patients may access in other developed countries, a phenomenon called “drug lag.”

As I wrote last month, while the FDA has not removed barriers to patients obtaining GLP-1s without a prescription, a recent study found people are already effectively buying GLP‑1 over the counter in a grey market. Last spring, Cato adjunct scholar Charles Silver joined Michael Cannon and me in calling for the FDA to reclassify GLP-1s as over-the-counter.

As the Axios reporter Tina Reed wrote:

The DIY movement taps into a deeply held sentiment about an individuals’ autonomy when it come to accessing particular health interventions without the gatekeeping of the Food and Drug Administration or the sometimes untenable costs of certain drugs or therapies.

Of course, making or buying DIY drugs can be as risky as obtaining any other drug in an underground market. It’s the government’s monopoly on the drug approval process that fuels this underground market. It would be much safer to purchase legally manufactured drugs from retailers where the market and the tort system hold producers and retailers accountable for harmful side effects or defective products. Until lawmakers undertake reforms like those outlined in Drug Reformation, the DYI drug use phenomenon is likely to become more common.

Nicholas Anthony

The Financial Crimes Enforcement Network (FinCEN) has been the subject of scrutiny for years over its lack of transparency. The agency recently started to provide some information to the public but that information largely confirms long-held suspicions, namely that the Bank Secrecy Act’s mandatory financial surveillance is far from justified.

To set the foundation, FinCEN’s 2023 “Year in Review” report revealed that banks and other financial institutions filed 27.56 million reports under the Bank Secrecy Act during the 2023 fiscal year (Table 1). The vast majority of these reports (20.8 million) were filed as currency transaction reports, or CTRs, when people made a transaction of $10,000 or more.

A long-standing issue has been whether mandating the filing of these millions of reports has been worthwhile. Billions of dollars are being spent in compliance with a regime that requires financial institutions to report millions of transactions. So, how many criminals are being caught?

FinCEN’s report does not fully address this question but it does shine some light on the issue. For instance, when it comes to the Internal Revenue Service’s (IRS’s) criminal investigations, FinCEN reported that 13.9 percent of investigations in fiscal year 2023 originated from these reports (Figure 1). That’s down from the 15.8 percent of investigations FinCEN reported last year.

Given that the IRS had 2,676 criminal investigations during that time, this means approximately 372 investigations originated from a Bank Secrecy Act report. In other words, despite financial institutions spending $59 billion a year complying with this regime and filing over 27 million reports, the reports only initiated 372 criminal investigations.

That’s not to say the data are useless. FinCEN’s report noted that 85.7 percent of the IRS’s criminal investigations recommended for prosecution “have a primary subject with a related [Bank Secrecy Act] filing.” Likewise, for the Federal Bureau of Investigation (FBI), 15.42 percent of investigations made use of Bank Secrecy Act reports. The problem, however, is that there is a fundamental difference between investigations that originated with a report and investigations that benefited from a report.

Given it’s the case that the majority of “useful” reports are only used after an investigation has begun, there is little reason to justify mandating that these reports be filed instead of requiring law enforcement to obtain them via the warrant process. It’s no secret that government officials prefer to have sweeping access to the financial records of Americans, but it’s not supposed to be this way.

The Constitution was put in place to restrict the powers of government and protect the people. Yet what we have seen in practice is that officials expand the powers of government and restrict the people. A change is long overdue to restore the balance between an individual’s right to live without government intrusion and the government’s ability to maintain the rule of law.

Ultimately, FinCEN’s report highlights what critics have long suspected: that mandatory financial surveillance under the Bank Secrecy Act is both costly and ineffective. There are still many unanswered questions that FinCEN needs to address. However, one thing is clear. It’s time for Americans to have protections that are in line with the framework crafted in the Fourth Amendment.

Gene Healy

The pivotal moment in the September 10 debate came roughly 28 minutes in when Vice President Kamala Harris successfully baited the world’s most baitable man. If you attend a Trump rally, she told the audience, you’ll “notice that people start leaving his rallies early out of exhaustion and boredom.” On the split-screen, the former president’s eyes visibly widened, and you could almost see self-restraint and message discipline leaving his body. It was off to the races from there.

Though it got lost in the multicar pileup that followed, I found what Harris said next more interesting. As Trump fumed, the vice president continued:

“And I will tell you the one thing you will not hear [Trump] talk about is you. You will not hear him talk about your needs, your dreams, and your, your desires. And I’ll tell you, I believe you deserve a president who actually puts you first. And I pledge to you that I will.”

Your needs; your dreams; your desires. What sort of job is this supposed to be anyway? Throughout the evening, Harris unspooled a vision of the office that evoked life-coach-with-nuclear-weapons or HR-administrator-gone-berserk. “I’d invite you to know,” she proclaimed at one point, “that Donald Trump actually has no plan for you”—hardly the most terrifying charge that’s been laid against Trump, and possibly less menacing than the notion that President Harris will “wake up every single day thinking about you and your families.” Please… don’t?

In fairness, Donald Trump’s conception of presidential power and responsibility, while less touchy-feely, is equally unhinged. Examples are legion: “I alone can fix it”; “I will give you everything”; “If I win all the bad things happening in the US will be “rapidly reversed.” If elected, he said on Tuesday, he’ll get “the Middle East… settled and fast,” and end the war in Ukraine “even before becoming president.”

For her part, Harris promised to provide “discourse about how we’re going to invest in the aspirations and the ambitions and the dreams of the American people”; she’ll be a president, she pledged in her closing statement, who will ask us, “are you ok?”

Are we ok? Maybe not, if we no longer even notice when presidential candidates talk about the position they seek as if it’s a combination of guardian angel, shaman, and supreme warlord of the earth.

Some 15 years ago, I wrote a book arguing that “Americans’ unconfined conception of presidential responsibility is the source of much of our political woe and some of the gravest threats to our liberties.” In The Cult of the Presidency: America’s Dangerous Devotion to Executive Power, I made the case that, for far too long, Americans have looked to the presidency for far too much. As a result, the officeholder wields powers that no one fallible human being ought to have: “The Imperial Presidency is the price of making the office the focus of our national hopes and dreams.”

It’s a message that remains depressingly relevant today, which is why Cato has just released an updated edition of The Cult of the Presidency. In an extensive new preface, I take stock of what’s changed in the years since Cult was published, as our politics grew increasingly feral, and the “most powerful office in the world,” even more powerful. More than ever before, I argue, in Election 2024, the presidency itself is the problem.

Credit (or blame?) for the re-release goes to my colleagues in Cato’s books department, who looked out upon our ongoing national nightmare and perceived a marketing opportunity—a chance to put Cult’s themes in front of a new set of readers. They pressed me to update the book for a fall release (“Just when I thought I was out, they pull me back in!”), and I submitted the manuscript the first week of June. Here’s how the new preface originally described the 2024 state of play:

This coming November, we face the second matchup between a man who ginned up a riot hoping to intimidate Congress into overturning the results of an election he’d lost, and a sundowning octogenarian whom 69 percent of Democrats consider “too old to effectively serve.” Little wonder, then, that according to a 2023 voter survey, the most prevalent sentiment in this election cycle is “dread” (41 percent), followed by “exhaustion” (34 percent). Toward the end of Cormac McCarthy’s novel Suttree, the ne’er-do-well protagonist, having lately recovered from a barfight skull fracture followed by a bout of typhoid fever, muses to himself: “There are no absolutes in human misery and things can always get worse.” So here we are.

That last bit still holds, but the rest of the passage has been overtaken by events. First, on June 27, a stumbling, shambolic debate performance laid bare the extent of President Biden’s decline. Then, as pressure mounted on Biden to withdraw, the nation watched former President Donald Trump survive an assassination attempt by mere inches, thanks to a chance turn of the head. Eight days later, in a cryptic note released via the social media platform X, President Biden announced his decision to bow out. Since then, we’ve seen a burgeoning “Cult of Kamala” memed into existence by Democratic-Party aligned media—and, on September 15, another foiled assassination attempt on former President Trump. At this writing, the outcome of the 2024 contest remains radically uncertain, but dread and exhaustion persist.

In the new preface to the 2024 edition, I trace two dangerous trends that emerged in the years since Cult was first published. The first is the rise of what’s been dubbed “political sectarianism”: an intensifying partisan hatred in which American politics has taken on a quasi-religious fervor. The second is the simultaneous concentration of vast new powers in the executive branch. As our national divisions have widened, we’ve raised the stakes of our political differences dramatically. Recent presidents have asserted the power to decide what kinds of cars Americans can drive, who gets to come to the United States and who gets to stay, and which children can go to which bathroom in every K‑12 school across America—all that and more can now be settled—winner-take-all—by whichever political party manages to seize the White House.

In our partisan myopia, we’ve laid down the infrastructure for autocratic rule and sectarian warfare, making the presidency powerful enough to tear the country apart.

It turns out, things were even worse than I thought. But in the new edition of The Cult of the Presidency, I show how we got into this mess and chart the path for getting us out. It may not be the cheeriest book you read this campaign season, but I think its message has never been more urgent.

Walter Olson

Donald Trump is back to saying the 2020 election was stolen from him, and his followers regularly echo these claims. It’s therefore helpful to keep on hand one or two of the exhaustively detailed state-by-state accounts by election lawyers and scholars of why this isn’t so.

“Lost, Not Stolen,” from 2022, is a 72-page report from eight prominent conservative legal and political figures that knocks down many of the more frequently heard claims that the 2020 election was stolen or illegitimate. Among its all-star author lineup: Michael McConnell and two other former federal judges, former Solicitor General Ted Olson (who is no relation), and Republican election lawyer Ben Ginsberg.

Their “unequivocal” conclusion is that Trump lost; they find no credible evidence that fraud changed the outcome even in a single precinct, let alone in any state. I wrote about their report here.

In 2024 Justin Grimmer and Abhinav Ramaswamy of the Democracy and Polarization Lab at Stanford University published an 85-page dissection of the Trump fraud claims. Grimmer is also associated with the Hoover Institution.

“All of the claims we evaluate fail to provide evidence of fraud or illegal voting. Trump’s claims … are riddled with errors, hampered by misunderstandings about how to analyze official voter records, and filled with confusion about basic statistical techniques and concepts.” Like the authors of “Lost, Not Stolen,” Grimmer and Ramaswamy examine cases from all six of the close/​contested states in 2020, namely Arizona, Georgia, Michigan, Nevada, Pennsylvania, and Wisconsin.

When I wrote about the Grimmer/​Ramaswamy paper here, I addressed the argument that papers like these are pointless because those friendly toward Trump’s claims will not find or read them, while those opposed don’t need them. As I see it, persuasion matters and will always matter so long as questions of politics are resolved by something short of force.

At his debate with Kamala Harris, Trump repeated a claim he’s made before: that his 2020 election challenges were thrown out on standing rather than merits. So far as I’m aware, neither Harris nor the moderators challenged this assertion about standing, which is a shame because it was flatly false. While some cases did fail on standing (sometimes because Trump’s side had not proffered needed evidence), courts reached merits in case after case.

In a new piece, veteran lawyer Rich Bernstein examines how courts disposed of the Trump election cases, as enumerated in “Lost, Not Stolen.” Courts regularly cited merits, not infrequently in circumstances in which independent alternative grounds, such as standing or procedural flaws, would also doom a claim. (For a sample of a well-written opinion showing some of this interplay, read this from the Third Circuit on Trump’s Pennsylvania claims, written by Judge Stephanos Bibas, a Trump appointee.)

When Trump claims his supporters were never given their day in court to dispute the 2020 results, he bids to undermine the legitimacy of both the electoral and the judicial systems. Those are good reasons to make sure those assertions don’t go unchallenged.